March 10, 2010

Meinig ’61 Says Trustees Will Play ‘Interactive’ Role in Planning Process

The Sun sat down with the chair of the Board of Trustees, Peter Meinig ’61, to discuss the strategic planning process, the University’s investments and Big Red basketball.

Last March, Cornell’s Board of Trustees met in Ithaca and voted to take on about a half billion dollars in debt and significantly scale back the University’s endowment spending. Facing a $200 million budget shortfall, the University also announced hiring and construction freezes.

The trustees gather on campus this week under less immediately dire circumstances, yet the University still faces some daunting challenges. The Board of Trustees is set to receive an update this week on the University’s strategic planning efforts, which could fundamentally change how Cornell is structured. Meinig described how he views this process and the University’s financial situation.

The Sun: What will be the main item on the agenda for trustee meetings this week?

Sun: To what extent have trustees been involved in the strategic planning process?

P.M.: We’ve been involved up until now really in the same way that students, faculty and everybody else have been involved. [Trustees] are reading the websites and providing commentary.

We had a discussion about the process in January. After that January meeting, I had a conversation with President [David] Skorton and Provost Fuchs. We agreed that it would be good to have [the same] kind of interchange with the board that they have been having around campus. This is the board’s chance to provide the same kind of input and feedback to the process that the rest of the campus is providing.

The trustees aren’t bashful. There already is plenty of commentary and back-and-forth — e-mail, individual conversations. There is plenty of interaction going on with trustees today, just as there is with the 20 task forces that have been set up. Individual faculty members and individual administrators are also involved in the process. This is ongoing. It’s already started.

We’ll put [the process] in a framework [tomorrow] at the board meeting, and then we’ll have more in-depth discussions when we meet in New York for a full day [Apr. 7].

Sun: What is your take on how the “Reimagining Cornell” process will proceed? How will the University scale back its operations?

P.M.: Cornell, just as every other research university in the country, is operating in a constrained financial environment. We are the only institution that I’m aware of — of our caliber — that at the same time we’re addressing the financial pressures … we are also involved in a serious strategic planning effort. Everything that you’ve heard from Kent Fuchs and from President Skorton is about how to do a better job of delivering the products that we deliver. It’s not about how to do less. It certainly isn’t about trying to do ‘less with less.’

There are some things we’re going to have to do without. My point is that we intend, through the strategic planning process, to make sure that what we’re focusing on is important. And what we are doing, we’re going to do well. If you’re doing something well, that to me doesn’t say that you’re doing less.

Sun: What feedback have you given to the administration on strategic planning?

P.M.: Up to now, it hasn’t been collective [feedback]. It’s been individual comments. We don’t have any task forces; we’re going to address it as a board really for the first time on Friday. We will address it in a larger sense on Apr. 7 in New York.

The strategic planning process is an interactive one. The good thing here is that it’s being driven by the administration. It’s not something being imposed top-down by the Board of Trustees. If you want strategic planning to fail in any organization, have a board be the entity that’s pushing it into the organization. The good thing about Cornell is that President Skorton and the provost and the deans [have started this process]. The board is going to opine and be a participant in the process along with the rest of the University community.

Sun: Nonetheless, the Board of Trustees has to approve the final draft of the strategic plan. What will you be looking for?

P.M.: I can’t answer that because we’re not deep enough into the process yet. I might have some personal feelings — and other trustees have personal feelings — but this is really a group, collaborative kind of effort. So, I don’t want to say today what exactly I’m looking for. I want Cornell to be one of the top, research-based institutions of higher learning in the country. We want to be research-based. We want to be outstanding in our teaching. And, we also have the land grant mission of outreach and community involvement that most of our peer institutions don’t have. We should be among the top institutions in the world in these areas. That’s my aspiration for Cornell.

I’m very enthusiastic about the process. The reason the process is a good one is because we have great leadership at Cornell leading the effort. Pres. Skorton and Kent Fuchs are an outstanding team and they are fortunate that they’ve got a great group of academic deans. This is where the action is and this is where it should be. The deans are working in their colleges with the department chairs and individual faculty members. With a framework that’s been established by the administrative leadership, it really is up to the faculty and the departments and the deans to look at what’s going on in their colleges but also look across colleges.

Sun: How do you feel about student involvement in the process thus far?

P.M.: I think [the administration has fostered] the kind of involvement that they should invite from the students. How the [specific] committees are formed is really an issue for the President and the Provost. My sense is that President Skorton and Kent Fuchs tend to be very inclusive. There’s an undergraduate student on the board. That person will be very active and involved in the process. Can you think of another University where students are on the board of trustees?

No other University has the wide range of participation of the different constituencies on its board than Cornell. Cornell has two students [on the Board of Trustees]. Cornell has two faculty [board members]. Cornell has an employee representative. We have two representatives from the agricultural sector of the State of New York. We have two representatives from the labor sector of the State of New York. We have alumni-elected trustees. We have board-appointed trustees. I call that a very widely-representative board.

Sun: In the 1970s and early 1980s either four or five students were voting members of the Board of Trustees. Today, there are two students in those positions. Are your satisfied with the current level of student participation on the Board of Trustees?

P.M.: I’m satisfied because in the time that I’ve been on the board, the student trustees have been exceptional board members. They do a great job of represen

ting the student body. But, when you’re on a board of directors or board of trustees, [even though] you may have been appointed or been voted on that board by a specific interest group, when you act on that board, you really should be acting in the best interest in the University — not just the best interests of the group that put you on that board.

Frankly, the students and the faculty and employees that I’ve seen on our board very quickly — once they see how the board operates — become trustees of the University. I think the students do a great job. Whether you have two or four or 10, I don’t think makes any difference. There wouldn’t be more influence if you had four students or 10 students. That wouldn’t have any more influence on the board than when you have two. When students speak at a board meeting or in committee meetings, everybody listens. They don’t always do what [the students want] to happen, but the board doesn’t always do what any other individual trustee wants to do, either.

Sun: Last month, the University’s Chief Investment Officer James Walsh resigned after three and a half years on the job. How is the replacement process going?

P.M.: We’re in the process of putting together the job description. We want a person who’s an experienced investor, who we believe has the ability to manage an office of some 25 people, most of whom are professionals. He or she has to be a leader. We’ll look at a person’s performance, and I’ve very optimistic that we will have a large pool of candidates from which to select.

We’re in the process of hiring a search firm, and that’s effort being led by Pres. Skorton and [Vice President of Human Resources] Mary Opperman and [Chair of the Board of Trustees’ Investment Committee] Paul Gould. Once we do that, we’ll go out into the marketplace. We’re pretty optimistic about the quality of people who are going to be attracted to the position.

Sun: Given the drop in the University’s endowment more than a year ago, will you be looking for a candidate who has a more conservative investment philosophy?

P.M.: Cornell has a very diversified investment portfolio. The issue of asset allocation and risk is an interactive process between the Investment Committee of the Board of Trustees and the Investment Office. It’s not just what the CIO wants to do; it’s a combination of what the CIO and the Investment Committee want to do. The amount of risk-taking and the amount of liquidity that we have in our portfolio is a decision of that collective group.

Cornell, compared to most of our peers, has done quite a good job of protecting the liquidity of the portfolio. We’re not in the position that many of our comparable institutions are in; that we have to sell private equity or sell real estate to generate liquidity so that we have the funds available to [sustain university operations].

Sun: How has the financial crisis affected decision-making at the Board of Trustee level? Has there been a change in strategy?

P.M.: We’re trying to be liquid. I’m sure we will continue to have a very diversified portfolio. Less liquid investments will probably be a smaller percentage of our total assets.

Harvard, Yale and Princeton have had to sell some of their less liquid investments because of liquidity demands to support the operating budgets of their universities. Our financial model is very different. Payout from the endowment at Cornell is about 11 or 12 percent of our operating budget. At Harvard, it’s over 35 percent. At Princeton it’s in the 40′s. Yale is in the 30′s. We have other sources of revenue that are significant in our operating budgets. We rely less on the endowment, which doesn’t mean that endowment performance is not important — it is important — but we are less impacted by the pressures from endowment returns being down in fiscal year ending in 2009 than many other universities are.

Sun: As we head into “Selection Sunday” this weekend, do you have any thoughts about the Cornell basketball team?

P.M.: Over the last month or so, I’ve watched or listened to every Cornell basketball game. We’re really proud of the performance. [Head Coach] Steve [Donahue] has done a great job, and he’s got a great group of youngsters working with him on the team. We wish him well. I think they’re going to do well in the NCAA tournament.

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